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Challenges continue for U.S. cotton industry

A year of trials for U.S. cotton could foreshadow changes in farm programs and severe damage to the industry. But agriculture still has friends in high places, says Neal Gillen, Executive Vice President and General Counsel, American Cotton Shippers Association.

Gillen, speaking to the recent annual meeting of the Texas Cotton Association in Austin, said the adverse ruling from the World Trade Organization, allowing most of Brazil’s claims against the U.S. cotton program, would eliminate the Step 2 payment.

He said pressures from the WTO and a “disinformation campaign waged by our detractors across the globe is distorting the image and role of the United States in the world arena. The developing countries—the Cairns Group and the Group of 20, and now the European Union—countries we have continually supported militarily and economically for the past century have developed a sudden case of amnesia.”

He said that instead of recognizing the contributions the United States has made “they are attacking our principles, our people, and our programs when our textile mills are fighting for their lives and our farmers are finally getting back on their feet.”

He said the United States has a commitment to liberalize trade that has hurt cotton. Much of the U.S. manufacturing capacity has moved offshore and much of the nation’s textiles come from imports. “Now, U.S. consumption far exceeds U.S. production.”

He says competing nations want access to our textile markets while they close their borders and protect their economies.

“Our principal critics are those who have free access to the United States for their textile goods and other farm products,” he said. “They avoid answering a critical question in this regard: What would be the price and income prospects for European, West African and Brazilian cotton producers if the retail consumption of cotton in the United States were only 12 million bales per year rather than 22 million?”

He calls the current mindset a double standard.

“What about access for our textiles to their markets. That wouldn’t be fair, they maintain. (Competitors claim) ‘We have to close our borders to your goods to protect our economy, but you have to open yours or our economic structures will tank and we will breed more terrorists.’ That’s what we’re up against today.”

Gillen says building the next farm bill will be difficult because of trade issues, and not just for cotton. “All program commodities will be in the same boat,” he said. He looks for no significant change in the U.S. farm bill until an acceptable WTO agreement is reached.

Gillen said legislators such as Saxby Chambliss, Chairman of the Senate Agriculture Committee, and Thad Cochran, chairman of the Senate Appropriations Committee, are looking out for U.S. farm interests.

“Our strength is in the Senate,” he said. “Though we have detractors like Sen. Grassley, the Senate Agriculture Committee is led by Chambliss, a firm advocate of the cotton program, and is backed by Cochran, a powerful cotton advocate.”

Balking at the proposed agricultural program budget cuts is a case in point. “Pressure from members of the House and Senate Agriculture Appropriations Subcommittee caused (Secretary of Agriculture Mike) Johanns to cave on the issue of payment limits,” Gillen said. “Congress made the decision to limit the cuts to $3 billion compared to the $5.7 billion recommended by the White House.”

Gillen said a proposal to exclude agriculture from budget reconciliation failed in the Senate by only four votes.

Gillen said it’s perplexing that the WTO panel allowed Brazil’s claims.

In 2002 Congress took “great care in drafting the farm bill,” he said. “Members of the House and Senate Agriculture Committees believe they drafted the 1996 and 2002 farm bills within the parameters of the Uruguay Round Agreement, and the U.S. Department of Agriculture and the U.S. Trade Negotiator argued in the WTO that the legislation was drafted and implemented in compliance with the agreement.”

He said in light of recent findings those who draft the next farm bill would consider it carefully before it’s completed.

Gillen said the July 1 deadline for WTO compliance poses difficulty. The Step 2 program, for instance, includes mill contracts and sales into fall.

He also noted that the program would remain intact until Congress changed the law. “These are challenging times for the U.S. cotton industry and your associations are working to assure that your cotton has a reasonable chance in the world market,” Gillen said.

“The process is political, so we have to be active in politics. Our programs are political achievements and if you want to maintain them, you must participate in the political process.”

Gillen also expressed displeasure that the United States is being cast as “the bad guy. The European Union is making changes and making a great deal over those changes, but they don’t take effect until 2006. For now, the EU is taking credit for something they have not done yet.”

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